| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥17.1B | ¥16.4B | +4.3% |
| Operating Income / Operating Profit | ¥-4.5B | ¥-2.9B | -57.3% |
| Ordinary Income | ¥-5.0B | ¥-4.4B | -12.8% |
| Net Income / Net Profit | ¥-5.1B | ¥-4.8B | -6.3% |
| ROE | -4.9% | -4.7% | - |
FY2026 Q1 results: Revenue ¥17.1B (YoY +¥0.7B +4.3%), operating loss ¥4.5B (YoY -¥1.6B -57.3%), ordinary loss ¥5.0B (YoY -¥0.6B -12.8%), quarterly net loss ¥5.1B (YoY -¥0.3B -6.3%). Despite revenue growth, operating deficit widened, resulting in performance comparable to a decline in revenue and profit. While sales slightly increased, gross profit fell sharply to ¥1.3B (gross margin 7.8%) from ¥2.2B (13.5%) a year earlier, insufficient to cover SG&A of ¥5.9B (34.5% of sales), leading to an operating loss. Non-operating activities included foreign exchange losses of ¥1.2B, contributing to expanded losses at the ordinary income level. By segment, the core Gaming Business declined to ¥13.8B (-15.7%), while the Other segment expanded rapidly to ¥3.3B (+9,990.7%) but posted a segment loss of ¥-0.6B and did not contribute positively to earnings. Full year guidance remains Revenue ¥170.0B (YoY +147.9%) and Operating Income ¥10.0B, but Q1 progress is 10.0% of revenue and negative for operating income, implying substantial improvement is required over the remaining three quarters.
[Revenue] Revenue was ¥17.1B, up +4.3% YoY. By segment, the Gaming Business declined to ¥13.8B (prior ¥16.3B, -15.7%), while the Other segment expanded to ¥3.3B (prior ¥0.0B, +9,990.7%), resulting in modest overall revenue growth. In the Gaming Business, user monetization revenue decreased to ¥10.7B (prior ¥12.6B), primarily due to weaker spending on existing titles. The Other segment expanded to a 19.3% share of sales but remains in an early stage with immature profitability. Gross profit was limited to ¥1.3B (gross margin 7.8%), worsening by approximately 5.7pt from ¥2.2B (13.5%) the prior year. By segment profit, the Gaming Business secured ¥2.0B of profit, while the Other segment recorded a ¥-0.6B loss, diluting consolidated gross profit.
[Profit & Loss] SG&A was ¥5.9B (34.5% of sales), up +15.4% from ¥5.1B the prior year. With gross profit of ¥1.3B unable to absorb SG&A, operating loss widened to ¥4.5B (operating margin -26.6%), expanding the deficit by about 9.0pt from prior year loss of ¥2.9B ( -17.6%). Non-operating income was ¥0.4B (including interest income ¥0.1B, foreign exchange gains ¥0.3B), non-operating expenses were ¥0.8B (including foreign exchange losses ¥1.2B, investment partnership loss ¥0.3B), resulting in a net foreign exchange-related loss of approximately ¥0.9B. Ordinary loss was ¥5.0B (ordinary margin -29.0%), wider than prior year ¥4.4B ( -26.8%). Extraordinary items were effectively zero (extraordinary income ¥0.0B, extraordinary loss ¥0.0B), so loss before tax was ¥5.0B. After corporate taxes of ¥0.1B, quarterly net loss was ¥5.1B (net margin -29.9%), slightly wider than prior year ¥4.8B ( -29.3%). In summary, despite revenue growth, a large deterioration in gross margin, higher SG&A, and foreign exchange losses caused widening deficits at operating, ordinary, and net levels.
The Gaming Business reported Revenue ¥13.8B (YoY -15.7%) and Segment Profit ¥2.0B (segment margin 14.3%), with core monetization revenue declining to ¥10.7B (prior ¥12.6B). Weakening user monetization for existing titles and limited effectiveness of events/operational measures appear to be the drivers. The Other segment rapidly expanded to Revenue ¥3.3B (YoY +9,990.7%) but recorded a Segment Loss of ¥-0.6B (segment margin -19.1%). As a new business phase, it has not yet monetized and dilutes consolidated gross margin. Consolidated segment profit totaled ¥1.3B, matching gross profit, and SG&A of ¥5.9B resulted in an operating loss of ¥4.5B.
[Profitability] Operating margin was -26.6%, worsening 9.0pt from -17.6% a year earlier, and gross margin fell to 7.8% from 13.5%, down 5.7pt. SG&A ratio rose to 34.5% (prior 31.1%), with fixed cost burden weighing on profitability. Net margin was -29.9%, slightly worse than -29.3% prior. ROE was -4.9%, reflecting negative returns on shareholders’ equity. [Cash Quality] DSO (days sales outstanding) extended to 151 days, indicating room to improve collection efficiency. Cash and deposits were ¥38.3B, down -26.6% from ¥52.1B prior, reducing liquidity cushion. Accounts receivable decreased to ¥7.0B from ¥11.5B ( -38.9%), though DSO lengthening is likely due to changes in sales composition. [Investment Efficiency] Total asset turnover was 0.132x, indicating low asset efficiency, and recoveries on intangible assets of ¥35.7B (27.7% of total assets) are a challenge. [Financial Soundness] Equity Ratio was 81.3%, improved from 77.6% prior, indicating low financial leverage. Current Ratio was strong at 295.9%, limiting short-term liquidity risk. D/E ratio was conservative at 0.23x.
Cash flow statement is not disclosed; funding trends are inferred from balance sheet movements. Cash and deposits fell to ¥38.3B from ¥52.1B, a decrease of ¥13.9B, apparently compressed by continued operating losses and allocations to investing activities. Accounts receivable declined to ¥7.0B from ¥11.5B, a ¥4.5B improvement, yet DSO at 151 days signals considerable room for collection efficiency gains. Accounts payable fell to ¥5.4B from ¥6.7B, down ¥1.3B, and shortened payment terms may have increased working capital outflow pressure. Investment securities increased to ¥8.4B from ¥2.5B, up ¥6.0B, indicating part of cash was allocated to investment assets. Intangible assets increased to ¥35.7B from ¥31.7B, up ¥4.0B, indicating continued development investment. Overall, operating deficits and investing activities reduced cash balances, but liquidity remains ample and short-term funding risk is limited.
Earnings are primarily derived from ongoing business operations, with minimal impact from extraordinary items (extraordinary income ¥0.0B, extraordinary loss ¥0.0B). Non-operating income of ¥0.4B represents 2.4% of sales, showing high dependence on operating revenue. However, non-operating expenses included foreign exchange losses of ¥1.2B; netting foreign exchange gains of ¥0.3B still produced approximately ¥0.9B of FX-related loss, indicating FX volatility pressures ordinary results and a need for volatility management. Ordinary loss ¥5.0B is nearly equal to loss before tax ¥5.0B, showing no distortion from one-off items. Comprehensive income was -¥5.5B, ¥0.4B below net loss -¥5.1B, as valuation difference on available-for-sale securities -¥0.3B and foreign currency translation adjustments -¥0.1B depressed comprehensive income. Earnings quality relies on business revenue, but FX impacts and securities valuation fluctuations reduce overall return stability.
Full-year guidance remains Revenue ¥170.0B (YoY +147.9%) and Operating Income ¥10.0B. Q1 progress is 10.0% of revenue (standard progress 25% implies -15.0pt) and operating income is a ¥-4.5B shortfall against full-year target, requiring significant improvement over the remaining three quarters. Revenue drivers for achieving guidance include monetization of new titles, ARPU recovery of existing titles, and full-scale operation of Other businesses. On the profit side, improving gross margin, SG&A efficiency, and reducing FX losses are necessary. Guidance was revised as of Q1; achieving the full-year outlook requires accelerated momentum from Q2 onward.
Dividend forecast is nil (DPS ¥0.00), and with quarterly net loss ¥5.1B, payout ratio is not computable. Given current profitability and cash generation, resumption of dividends depends on sustained operating profitability and recovery of operating cash flow. No share buyback has been announced; prioritization is on business turnaround and financial stability over shareholder returns.
Revenue concentration in Gaming Business and gross margin deterioration risk: Gaming accounts for 80.7% of sales and its segment margin 14.3% is the source of consolidated gross profit. However, user monetization declined -15.7% YoY, and shorter title lifecycles and limited operational event effectiveness are pressuring gross margins. Consolidated gross margin fell to 7.8% from 13.5%, down 5.7pt, raising concerns of structural profitability decline. Delays in monetization of the title pipeline or intensified competition would make gross margin recovery difficult.
Fixed SG&A burden and deterioration of operating leverage: SG&A ¥5.9B (34.5% of sales) rose 3.4pt from 31.1% prior, with fixed cost weight being the main driver of the operating deficit. SG&A growth +15.4% far outpaced sales growth +4.3%, indicating lack of scale economies. Without optimization of personnel and marketing expenses, converting revenue growth into operating profit will be delayed.
Continued FX losses and declining liquidity cushion: Foreign exchange losses ¥1.2B (net FX loss approx. ¥0.9B after FX gains ¥0.3B) are pressuring ordinary results and FX volatility is destabilizing earnings. At the same time, cash and deposits declined to ¥38.3B (YoY -26.6%), reducing liquidity cushion. If operating losses persist and investment continues to consume cash, future funding flexibility may be impaired.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | -26.6% | 6.2% (4.2%–17.2%) | -32.8pt |
| Net Margin | -29.9% | 2.8% (0.6%–11.9%) | -32.7pt |
Profitability metrics lag industry peers significantly; gross margin decline and fixed cost burden result in disadvantage at operating and net profit stages.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 4.3% | 20.9% (12.5%–25.8%) | -16.6pt |
Growth rate is in the lower tier within the industry, constrained by revenue declines in existing titles.
※Source: Company compilation
Priority is restoring gross margin and improving SG&A efficiency: Gross margin declined to 7.8% from 13.5% and SG&A ratio rose to 34.5%. To eliminate the operating loss of ¥4.5B, recovery of ARPU in the Gaming Business, monetization of new titles, and absolute reductions in SG&A are essential. Progress in operational measures and cost optimization from Q2 onward will be key to achieving full-year guidance.
Full-year guidance requires substantial improvement over the remaining three quarters: Q1 progress vs. full-year revenue ¥170.0B was 10.0%, and operating income guidance ¥10.0B had Q1 at -¥4.5B. Simultaneous realization of new title launches, recovery of monetization in existing titles, profitability in Other businesses, and reduced FX losses are required, making the achievement hurdle high. Monitor potential further revisions to guidance.
Liquidity is ample but reversing the cash decline trend is a challenge: Cash and deposits are ¥38.3B, down -26.6% YoY; operating losses and investment activities are consuming cash. While current ratio 295.9% and Equity Ratio 81.3% show maintained financial health, sustainable operating cash flow generation and reversal of the cash decline trend are prerequisites for viability.
This report was automatically generated by AI analyzing XBRL financial statement data to produce a financial analysis document. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information aggregated by the company from publicly disclosed financial statements. Investment decisions are your responsibility; consult a professional advisor as needed.